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Lloyd Adams of Team Asset Management offers this week’s global market review
EUROPEAN markets edged up this week as investors reacted to Washington talks between presidents Trump and Zelenskyy and European leaders.
However, defence-related stocks that have enjoyed a remarkable rally so far in 2025 came under selling pressure after Trump suggested peace negotiations could proceed without a ceasefire and hinted that European nations would provide Ukraine’s security guarantees in co-ordination with the US.
US wholesale prices rose in July, signalling that inflation may be a concern and hinting at potential pressure on future consumer prices. The producer price index jumped more than expected, driven by higher service costs, machinery and equipment sales, portfolio management fees and airline services.
While headline inflation remains above the Federal Reserve’s target, consumer prices have been relatively muted, suggesting businesses have absorbed much of the tariff costs rather than passing them on. The report shook markets, tempering expectations of imminent rate cuts while economists warn that businesses may soon start passing more costs to consumers.
This surge in wholesale costs is being felt at the small-business level. Small US businesses are struggling with rising prices on coffee, tea and spices, despite overall food prices remaining largely steady last month. Coffee alone surged 14.5% year-on-year, forcing cafés and speciality retailers to raise prices by up to 25% since January. Many owners warn that rising tariffs risk forcing businesses to compromise on quality or even close.
The US and China have agreed to extend their fragile trade truce for another three months, narrowly avoiding a fresh escalation in tariffs. Both sides will keep existing duties in place while talks continue on long-standing disputes over market access, rare earth minerals, technology exports and energy supplies. The pause gives negotiators breathing space, but businesses warn that the uncertainty makes planning almost impossible. Despite the extension, trade flows have slowed sharply, with imports and exports between the two countries well down on last year.
Energy markets remain under pressure, with oil prices sliding as forecasts point to rising supply outstripping demand. The International Energy Agency expects stockpiles to build this year and beyond, aided by OPEC+ lifting output. Uncertainty over sanctions also weighed on sentiment, with talks between presidents Trump and Putin raising the possibility of more Russian oil entering an already oversupplied market if restrictions are eased. In metals, copper edged higher, but investors remain cautious amid a stronger dollar, trade tensions and weak Chinese demand. Gold prices held steady.
Some individual stocks also made headlines. US chipmaker Intel (+26.41%) enjoyed strong gains after reports the Trump administration may take a stake to support its delayed Ohio plant, providing potential backing for its AI ambitions and marking a rare government intervention. Meanwhile, Reddit (+14.42%) hit record highs on the back of strong quarterly results, with rapid advertising growth and rising daily users fuelling a sharp rebound in revenue.
In crypto, bitcoin hit a new record during the week before slipping back below the $120,000 mark by Friday. The spotlight turned to ether, which is edging close to its previous peak from late-2021 after a sharp rally. The cryptocurrency has risen strongly in recent months, boosted by news that investor Peter Thiel has backed ETHZilla, a listed company holding a large reserve of ether. The firm plans to deploy its holdings into decentralised finance to generate income, echoing the corporate treasury approach seen with bitcoin.
A quieter week is expected as holidays keep trading volumes light, though a few key events could set the tone. Investors will watch Purchasing Manager Index surveys in the US and Europe for signs of economic momentum, while Eurozone inflation figures may offer clues on price pressures. In the US, earnings from retail giants Walmart, Home Depot and Target should provide insight into consumer spending trends. The week concludes with the Federal Reserve’s annual Jackson Hole gathering, where chairman Jerome Powell’s comments will be scrutinised for signals on future policy.
